Corporate News - 28 March 2018
Back in May 2017, the Corporations Amendment (Crowd-sourced Funding) Act 2017 and Corporations Amendment (Crowd-sourced Funding) Regulations 2017 established a legislative framework for public companies to raise funds by issuing ordinary shares to a large pool of investors without being listed on a stock exchange, using the services of a licensed CSF platform.1 That legislation commenced on 29 September 2017, but prior to any CSF offers being launched – CSF platforms needed to be granted new CSF licence authorisations by ASIC.
On 11 January 2018, the Australian Securities and Investments Commission (ASIC) announced that it has licensed the first crowd-sourced funding (CSF) intermediaries under the CSF regime.
The CSF regime allows eligible unlisted public companies with less than $25 million in assets and annual revenue to offer shares to retail investors through a licensed CSF intermediary’s platform, using an offer document. The regime is designed to reduce the regulatory burden for early stage companies making public offers, while ensuring adequate protections for retail investors.
Eligible public companies are able to raise up to $5 million in funds through equity crowdfunding, with retail investors able to invest up to $10,000 per issuing company in any 12 month period.
In order to host eligible companies’ offers, CSF intermediaries are required to hold an Australian Financial Services Licence with an authorisation to provide a crowdfunding service. The first crowdfunding intermediary licences have been issued to a total of seven groups, one of which operates the Sharequity platform www.sharequity.com.au.
Sharequity has various offerings on its platform, including sophisticated investor raisings for listed and mature unlisted public companies, IPO raisings and pending crowdfunding offers. Sharequity’s platform is presently offering various sophisticated investor raisings and is preparing to “go live” with several crowdfunding investment opportunities.
Steinepreis Paganin has an alliance with Sharequity to (a) allow clients to promote all non-crowdfunding opportunities on the platform at no cost to the client and (b) facilitate crowdfunding opportunities through the platform (with the assistance of BDO and Steinepreis Paganin). We encourage all clients doing an equity raising (i.e. IPO, RTO or secondary raising) to use the Sharequity platform. It is, in effect, a way of promoting your company through an internet forum for no upfront cost.
1. There is currently legislation before Parliament which, if passed, will extend access to the CSF regime to eligible proprietary companies. Obviously, the extension of the crowdfunding regime to proprietary companies has the potential to allow a much larger number of Australian businesses to access this new form of capital.
2. Steinepreis Paganin Partners, Peter Wall and Matt Hawtin, have a financial interest in Sharequity Pty Ltd, the authorised operator of the sharequity platform.